154# The Bat Method

It is a medium term, easy to trade system with a good win loss ratio. It is
traded using

an indicator that is based on the ATR trailing stop.

Correct money management and risk is an extremely important factor in the success
of using this system.

Attached you will also find the BAT ATR indicator.

SET UP

1. During backtests, we used MT4 with Alpari data. You can use any MT4 platform
and data feed but due to variations between platforms and data feed, traders will get different signals as ATR lines-Prices/times etc on data feeds vary.

2. Use 1 Hour Chart and start with GBPUSD. Later on, we’ll discuss other
currencies as well.

3. Put on the indicator FF ATR Trailing Stop v 1. (Set the indicator parameters
to ATR Period 5 and Factor to 4.0)

4. Insert on the chart the Fib retracement tool ( F and dotted lines button on
toolbar.) Once the fib lines are on the chart right click on the chart and got to‘objects

list’ and then highlight the fib tool and click ‘edit’. Go to the fibo level tab
and enter or change the following.

Under:-

Level 0 Description ‘Swing’

Level 0.382 Description ’38.2 - 2 lots’

Level 0.618 ’61.8 - 1 lot’

Level 1 ‘Enter 1 lot’

Level 1.618 ‘161.8’

The Bat Method

The Blue and Red Lines are called BATlines.

The Strategy

Entry

Our entry into a trade occurs when price breaks
through the BAT line. If the current BAT is blue then price will be above it. As soon as price touches and breaks through the blue BAT we are going SHORT with one entry. It is a good
idea to place a pending order at this BAT line to be sure not to miss the initial entry. Once price breaks through the blue BAT line then you will notice a red BAT
line

starting to form. It will not happen in the
current time bar but will start to form at the close of the next time bar. The rules will be the reverse for a long trade.

Alerts

It is important to know when a trade is triggered as we
then have to place pending orders. The MT platform has an alert facility in the terminal section. Please set this up to give you an alert as soon as price breaks
through.

Simple Bat Trade

I will explain the simple BAT trade with the following example. See the chart
2.

Price was under the red BAT line from 22/12 and on 27/12 price breaks through the
red BAT line at 9589.

We now place the fib lines on the chart. We draw
the fib line from the trade entry point at 9589 to a recent or significant low. In this example I will draw the fib lines to the low of the bar 26/12 19.00 at 1.9511. See the
chart.

Once the trade has been triggered (we will call this entry ‘trade1’) we place
pending orders in the following way. They will be LONG trades.

Pending order for trade 2 at the 61.8 level 1 lot, pending order for 2 contracts
(trade 3 and 4 ) at the 38.2 level.

Our stop loss at this stage will be 10 pips below the most recent low (The low we drew the fib to)
.

The strategy is to pick up more trades if price retraces to these levels. In the
simple BAT trade price does not retrace…..it just zooms through.

See chart 3…it shows that price just continues to go north. Once price hits the
161.8 level then you can cancel your pending orders.

{If price turns around from the 161.8 level then it is most likely a reversal of
trend

and we do not want to be adding more trades)

Once the blue BAT line has started to form and once it
passes our original stop we move our stop
to the level of the blue BAT line and
always keep it there.The simple BAT exit for this trade is when price breaks through the blue BAT lineand will give us entries to go SHORT.

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